German automotive giant Daimler has invested in electric-car company Tesla Motors and plans to use Tesla's battery packs in its Smart electric car due later this year.

At a Tuesday press conference held at the Daimler museum in Stuttgart, Germany, Tesla CEO Elon Musk and Daimler management board member Thomas Weber said the contract between the two companies calls for joint collaboration on the Smart electric car and future models.

Daimler has invested a "double-digit million-dollar sum" to acquire about a 10 percent stake in California-based Tesla, Weber said.

An electric Smart car being tested in Berlin as part of an electric-car trial.
Daimler

"We are about to combine the best of the old and new school," Weber said during a press conference, which was Webcast. "We are both deeply convinced that electric powertrains will play a major role in sustainability mobility."

Daimler plans to test those cars this year and to mass-produce the Electric Smart EV in 2012, Weber said.

The company, which has been working on electric-vehicle technology since the 1970s, chose to partner and invest in Tesla to help Daimler bring cars to market quickly, Weber added. "The first priority was to find the quickest and most straightforward solution," he said.

The technical collaboration calls for Tesla to supply battery packs and electric powertrain, and for Daimler to offer auto manufacturing and design expertise in a range of areas, such as safety and mass production, Musk said during the press conference.

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Martin LaMonica is a senior writer covering green tech and cutting-edge technologies. He joined CNET in 2002 to cover enterprise IT and Web development and was previously executive editor of IT publication InfoWorld.
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